Rural Health Clinics (RHCs)

The Rural Health Clinic (RHC) program is intended to increase access to primary care services for patients in
rural communities. RHCs can be public, nonprofit, or for-profit healthcare facilities.
To receive certification, they must be located in rural, underserved areas. They are required to use a team
approach of
physicians working with non-physician providers such as nurse practitioners (NP), physician assistants (PA), and
certified nurse midwives (CNM) to provide services. The clinic must be staffed at least 50% of the time with a
NP, PA, or CNM. RHCs are required to provide outpatient primary care services and basic laboratory services.

You will be notified whether you are eligible for the RHC program after your applications (the number of
applications depends on your state) have been processed. If eligible, the next step is the RHC Certification
inspection. When you are ready for inspection and in compliance with RHC requirements, notify your state agency.
The state agency will then conduct a survey. There are two alternatives to your state survey agency, the American Association for
Accreditation
of Ambulatory Surgery Facilities, Inc. (AAAASF) and The Compliance Team, both of which
are Medicare-approved private RHC accreditation organizations.

One of the final steps of the certification process is the RHC cost report. Once a clinic has received its
Medicare provider letter from CMS, the clinic files a projected cost report to have its Medicare rate
determined. Independent RHCs must complete Form
CMS-222-92, and hospital-based RHCs must complete Worksheet
M of Form CMS-2552-10. It is important to get expert advice from someone familiar with the appropriate
cost report. Accuracy can have significant financial impact on a year-end cost report.

Are there any other considerations before becoming an RHC?

Completing a financial assessment may be helpful to also see if becoming a certified RHC is a feasible option.
Financial benefits of RHC status depend on the mix of payers and services offered. Traditional Medicare
fee-for-service and state Medicaid provider rates could be better in some cases. When evaluating financial
feasibility, look at the broader financial picture rather than individual visits. You may want to hire a
consultant to conduct a financial feasibility study. A list of Consultants
and Vendors is provided by the National Association of Rural Health Clinics (NARHC). Please note that
NARHC does not endorse these consultants and is only providing the list as a service.

What is the difference between a provider-based RHC and an independent RHC?

Provider-based RHCs are owned and operated as an essential part of a hospital, nursing
home, or home health agency participating in the Medicare program. RHCs operate under the licensure,
governance, and professional supervision of that organization. Most provider-based RHCs are hospital-owned.

Independent RHCs are free-standing clinics owned by a provider or a provider entity. They
may be owned and/or operated by a larger healthcare system, but do not qualify for, or have not sought,
provider-based status. More than half of independent RHCs are owned by clinicians.

Are there location requirements for RHCs?

Yes, RHCs must be located in non-urbanized areas, as defined by the U.S. Census Bureau; however, there is no
restriction on how closely RHCs can be located to
one another. You can use RHIhub's Am I Rural? tool as a
first step to see if your location qualifies.

Geographic-Based Health Professional Shortage Areas (HPSAs) are population-based areas that
have workforce shortages in primary medical care, mental health, or dental health. HRSA's HPSA Find tool, searchable
by state and county, determines if your area is currently designated as a shortage area.

Population-Group HPSAs have barriers preventing the patient population from accessing
primary care providers within their area. The HPSA Find tool will also
determine if your area is currently designated as a shortage area.

Medically Underserved Areas (MUAs) are designated by HRSA as having a shortage of primary
care providers, a high infant mortality, high poverty, and/or a high elderly population. HRSA's MUA Find tool, searchable by
state and county, determines if your area has a current MUA designation.

Governor Designated and Secretary Certified Areas are designated by the chief executive
officer of the state (the governor) and certified by the Secretary of Health and Human Services as an area
with a shortage of healthcare services. Contact your State
Office of Rural Health for assistance in determining if there are any state designated shortage
areas in your state.

Additional rules apply to RHCs that choose to relocate. Any RHC that no longer meets one or both of the location
requirements and chooses to relocate to another non-qualifying area will be terminated from the program. An RHC
may maintain RHC status if the new location meets current location requirements. See Rural
Health Clinic (RHC) Location Determination Guidance Updated for detailed information.

Does an RHC have to be recertified?

No. Once a RHC becomes certified, it maintains its certification status unless it moves to a location that no
longer meets the RHC location requirements. RHCs do not have to be recertified similar to other facilities like
Critical Access Hospitals.

Are there special staffing requirements for RHCs?

RHCs must employ at least one nurse practitioner (NP) or physician assistant (PA). RHCs are required to be
staffed by an NP, PA, or certified nurse midwife (CNM), who must be on-site to see patients at least 50% of the
time the clinic is open. Other staff may work under contract. A physician (MD or DO) must supervise each NP, PA,
or CNM in a manner consistent with state and federal law.

Every RHC must be under the medical direction of a physician who is an MD or DO, but the physician's
level of direct patient care may be very limited. There is no specific FTE percentage or employed/contracted
agreement required for physicians in an RHC. The physicians do not have to be employed by the RHC; they can
provide services under contract. The arrangement must comply with state scope of practice laws, and the
physician must be on-site for sufficient periods depending on the needs of the facility and its patients.
Records review may be conducted via an electronic health record (EHR).

The J-I Visa Waiver allows
international medical graduates who have pursued residency training in the U.S. to stay in the country and
practice in a federally designated Health Professional Shortage Area (HPSA) or Medically Underserved Area
(MUA) if recommended by an interested federal government agency or by a state under the Conrad
30 program.

RHCs staff must meet traditional Medicare regulations for coding and documentation, as well as unique RHC
billing
requirements.

A December 2017 National
Advisory Committee on Rural Health and Human Services policy brief, Modernizing
Rural Health Clinic Provisions, made several recommendations to
modernize the Rural Health Clinic program, including a recommendation that the current payment cap be
reexamined. The committee further recommends the creation of a payment formula linking the cap with average per
visit costs of current RHCs.

How do states reimburse RHCs for Medicaid?

The first is a prospective payment system (PPS). Under this methodology, the state calculates a per visit rate
based on the reasonable costs for an RHC's first two years of operation. For each succeeding year, this per
visit baseline rate is increased by the Medicare Economic Index factor.

The second methodology is an alternative payment methodology. Under this methodology, there are only two
requirements: 1) the clinic must agree to the methodology, and 2) the payment must at least equal the payment it
would have received under the prospective payment system. Each state has its own method of applying the PPS or
alternative payment methodology. State Medicaid agencies should be contacted to determine how RHC rates are
determined in their state.

How does the Merit-Based Incentive Payment System (MIPS) affect RHCs?

In short, it doesn't. RHC services are exempt from the Merit-Based Incentive Payment System (MIPS) because MIPS
applies to payments made through the Physician Fee Schedule. The Quality Payment
Program (QPP) was created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MIPS is
one of two tracks within the QPP designed to provide incentives for high quality care. MIPS requires reporting
on quality improvement, performance assessment, and costs. These categories are factored into a score which
affects Medicare reimbursement.

Because RHCs receive cost-based reimbursement for RHC services, the bulk of their payment is exempt from MIPS.
However, some RHC clinicians furnish non-RHC services paid for under the Physician Fee Schedule (billed on CMS
1500). These non-RHC services may be subject to MIPS reporting requirements if the clinician exceeds the low
volume threshold set as: $90,000 Medicare Part B payments, or 200 Medicare Part B patients. Again, RHC billing
(CMS 1450) and reimbursement would not count toward the $90,000 threshold and those patients would also not
count towards the 200 Medicare Part B patients. If your clinician provides a significant amount of non-RHC
services on the Physician Fee Schedule (exceeding the low volume threshold), then those payments are subject to
MIPS reporting and adjustments.

RHCs are allowed to participate in MIPS voluntarily to obtain a MIPS score, but this score will not affect their
cost-based reimbursement. Because RHCs may voluntarily participate in MIPS, there is speculation that CMS may
include RHCs in MIPS in the future. For more information on MIPS eligibility, see CMS
MIPS Participation Fact Sheet.

Can RHCs join Accountable Care Organizations (ACOs)?

Yes, RHCs are
able to participate in the Medicare Shared Savings program and become an Accountable
Care Organization (ACO) or join an existing ACO. ACOs establish incentives for healthcare providers to
coordinate care among
different settings — hospitals, clinics, long-term care — when working with individual patients. The
CMS
Medicare Shared Savings Program rewards ACOs that meet certain performance standards for serving
Medicare beneficiaries. CMS has published Program
Statutes & Regulations that would help doctors and hospitals coordinate care through ACOs. See Medicare
Shared Savings Program for Providers for additional information about joining ACOs, the benefits, and
requirements for participation.

What is the difference between a Federally Qualified Health Center (FQHC) and a Rural Health Clinic (RHC)?

Although FQHCs and RHCs both provide primary care to underserved and low-income populations, there are some
fundamental differences.

Differences Between RHCs and FQHCs

Rural Health Clinics

Federally Qualified Health Centers

For-profit or nonprofit

Nonprofit or public facility

May be limited to a specific type of primary care practice (e.g., OB-GYN,
Pediatrics)

Required to provide care for all age groups

Not required to have a board of directors

Required to have a board of directors – at least 51% must be patients of the
health
center

Required to treat all residents in their service area with charges based on a
sliding
fee scale

Not required to provide a minimum of hours or emergency coverage

Required to be open 32.5 hours a week for FTCA coverage of licensed or certified
healthcare providers. Must provide emergency service after business hours either on-site or by
arrangement with another healthcare provider

Required to conduct an annual program evaluation regarding quality improvement

Required to have ongoing quality assurance program

Must be located in a Health Professional Shortage Area, Medically Underserved
Area, or
governor-designated and secretary-certified shortage area. May retain RHC status if designation of
service area changes.

Must be located in an area that is underserved or experiencing a shortage of
healthcare providers

RHCs must be located in non-urbanized areas

FQHCs may operate in both non-urbanized and urbanized areas

Required to submit an annual cost report; however, auditing of financial reports
is not required

The Rural Health Information Hub is supported by the Health Resources
and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS)
under Grant Number U56RH05539 (Rural Assistance Center for Federal Office of Rural Health
Policy Cooperative Agreement). Any information, content, or conclusions on this website are
those of the authors and should not be construed as the official position or policy of, nor
should any endorsements be inferred by HRSA, HHS or the U.S. Government.